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Eli Lilly Q4 revenue $7.440 billion

Christian Fernsby |
Eli Lilly and Company announced financial results for the fourth quarter and full year of 2020.

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Topics: ELI LILLY   

In the fourth quarter of 2020, worldwide revenue was $7.440 billion, an increase of 22 percent compared with the fourth quarter of 2019, driven by a 24 percent increase in volume and a 1 percent increase due to the favorable impact of foreign exchange rates, partially offset by a 4 percent decrease due to lower realized prices.

The company recognized worldwide revenue of $871.2 million in the fourth quarter of 2020 for bamlanivimab, its COVID-19 antibody therapy.

Excluding bamlanivimab revenue, worldwide revenue grew by 7 percent.

Key growth products launched since 2014, consisting of Trulicity, Verzenio, Taltz, Tyvyt, Olumiant, Jardiance, Emgality, Cyramza, Retevmo™, Baqsimi™ and Basaglar contributed nearly 12 percentage points of revenue growth and represented approximately 48 percent of total revenue for the quarter, or 55 percent of total revenue excluding bamlanivimab.

Revenue in the U.S. increased 31 percent, to $4.598 billion, driven by a 36 percent increase in volume, partially offset by a 5 percent decrease due to lower realized prices.

The company recognized U.S. revenue of $850.0 million in the fourth quarter of 2020 for bamlanivimab.

Excluding bamlanivimab revenue, revenue in the U.S. grew by 7 percent.

Increased U.S. volume for key growth products, including Trulicity, Taltz, Verzenio, Emgality, Retevmo, Cyramza, Olumiant, Jardiance and Baqsimi, was partially offset by lower volume for certain other products, including Forteo and Tradjenta.

Inventory stocking in the fourth quarter of 2020 was approximately $120 million higher than in the fourth quarter of 2019 due to lower than typical year-end stocking in 2019.

The decrease in realized prices in the U.S. in the fourth quarter of 2020 was primarily driven by increased rebates to gain and maintain broad commercial access across the portfolio, partially offset by modest list price increases, largely for diabetes, and, to a lesser extent, by changes to estimates for rebates and discounts, most notably for Taltz.

Segment mix was not a major driver of U.S. price performance in the fourth quarter of 2020, as increased utilization in more highly-rebated government segments was offset by lower utilization in the 340B segment, primarily for Trulicity and Humalog.

Revenue outside the U.S. increased 10 percent, to $2.842 billion, driven by a 9 percent increase in volume and a 3 percent increase due to the favorable impact of foreign exchange rates, partially offset by a 2 percent decrease due to lower realized prices.

The increase in volume outside the U.S. was driven primarily by increased volume for key growth products, including Tyvyt, Trulicity, Olumiant, Taltz, Verzenio, Jardiance, Cyramza, Basaglar, Emgality and Baqsimi, as well as volume gains for Alimta, partially offset by decreased volume for Cialis, Forteo and Trajenta.

In addition, revenue outside the U.S. in the fourth quarter of 2019 benefited from a milestone from Bayer Consumer Care AG resulting from its exclusive development and commercialization license for Vitrakvi.

The decrease in realized prices outside the U.S. was driven primarily by the inclusion of Tyvyt in the government reimbursement programs in China.

Gross margin increased 18 percent, to $5.720 billion, in the fourth quarter of 2020 compared with the fourth quarter of 2019.

Gross margin as a percent of revenue was 76.9 percent, a decrease of 2.1 percentage points compared with the fourth quarter of 2019.

The decrease in gross margin percent was primarily due to unfavorable product mix driven by bamlanivimab sales, higher amortization of intangibles expense related to Retevmo, the unfavorable effect of foreign exchange rates on international inventories sold, and the impact of lower realized prices on revenue, partially offset by greater manufacturing efficiencies.

Total operating expenses in the fourth quarter of 2020, defined as the sum of research and development and marketing, selling, and administrative expenses, increased 3 percent to $3.392 billion compared with the fourth quarter of 2019.

Research and development expenses increased 16 percent to $1.838 billion, or 24.7 percent of revenue, driven primarily by approximately $265 million of development expenses for COVID-19 antibody therapies and baricitinib.

Excluding these COVID-19 expenses, research and development expenses remained flat.

Marketing, selling, and administrative expenses decreased 8 percent to $1.554 billion, primarily due to lower marketing expenses, reflecting reduced promotional activity.

In the fourth quarter of 2020, the company recognized acquired in-process research and development charges of $366.3 million related to the previously-announced business development transactions with Innovent Biologics, Inc., Disarm Therapeutics, Inc., and Fochon Pharmaceuticals, Ltd.

There were no acquired in-process research and development charges in the fourth quarter of 2019.

In the fourth quarter of 2020, the company recognized income for asset impairment, restructuring and other special charges of $30.1 million, reflecting adjustments to prior period estimates for asset impairment and severance costs.

In the fourth quarter of 2019, the company recognized asset impairment, restructuring and other special charges of $151.7 million.

These charges were primarily related to the decision to close and sell a research and development facility located in the United Kingdom, as well as severance costs incurred as a result of actions taken to reduce the company's cost structure.

Operating income in the fourth quarter of 2020 was $1.992 billion, compared to $1.400 billion in the fourth quarter of 2019.

The increase in operating income was primarily driven by higher gross margin, lower asset impairment, restructuring and other special charges, and lower marketing expenses, partially offset by higher acquired in-process research and development charges and higher research and development expenses.

Operating margin, defined as operating income as a percent of revenue, was 26.8 percent.

Other income was $477.0 million in the fourth quarter of 2020, compared with other income of $262.9 million in the fourth quarter of 2019.

The increase in other income was driven primarily by higher net gains on investment securities.

The effective tax rate was 14.3 percent in the fourth quarter of 2020, as compared with 10.1 percent in the fourth quarter of 2019.

The effective tax rates for both periods were impacted by net discrete tax items.

In the fourth quarter of 2020, net income and earnings per share were $2.117 billion and $2.32, respectively, compared with net income of $1.496 billion and earnings per share of $1.64 in the fourth quarter of 2019.

The increase in net income and earnings per share in the fourth quarter of 2020 was primarily driven by higher operating income and higher other income, partially offset by higher income tax expense.


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